Why Refinance Home Loan? By refinancing, you pay less on monthly installment and shorter the repayment period (tenure), which means you can save BIG MONEY from the interest.
I just talked to an old friend (WoonKian.com, he is not an old man but know him since primary one) this afternoon and got a shock when he told me that he is still paying 6.75%(estimate) for his home loan. He told me that he has been paying the home loan for 8 years. My advice to him is to “Refinance” his home loan and I am very sure that his home loan has exceeded the “lock-in” period, which is normally 5 years; some cases are 3 years or 7 years, you need to refer it to your loan agreement.
Does it mean if it is still within the lock-in period, he can’t refinance his home loan? No, but he has to pay “penalty” if he refinances from other banks during the lock-in period, eg. 3% of the loan amount. If your loan amount is RM180,000, then you need to pay RM5,400++ for the penalty. Unless the other banks offer very good rate to you, or your existing interest rate are too high, otherwise most cases are “not worth” to refinance during lock-in period.
What you should ask and compare when approaching banks for refinancing?
1. The Interest Rate
2. Monthly Installment Amount
3. Repayment Period
4. Zero Moving Cost or Zero Entry Cost
5. Lock-in Period
6. Flexi Home Loan
7. MRTA
1. The Interest Rate
Some banks are offering BLR-x.xx% and some banks have fixed interest rates. BLR (Base Landing Rate) is 5.55% (as at the date I write this post) for most of the banks in Malaysia. If the bank offer you BLR-2.0%, it means your interest rate will be 3.55%. If compare to my friend WoonKian.com’s current interest rate around 6.75%(estimate), he can save 3.2% from his interest, almost half of his existing interest, which means he can save his home loan interest by 47%. Some plans are fixed rates throughout the whole tenure, and yet, you need to compare which is better offer.
2. Repayment Period
Normally banks allowed 30 years tenure or up to 65 years old, whichever is earlier. But there are exemptions in some banks also. So, just tell the bank the repayment period that you wish, so that they can calculate the monthly installment amount and total interest to be paid. My suggestion is to take maximum tenure. The reasons are less monthly commitment and if you have extra money, just dump into the home loan as advance payment, you still can save the interest.
3. Monthly Installment Amount
Some banks might confuse you with their rates because some of the rates are cheapest in first year, slightly higher in second year, third year onwards is higher, eg. 1st Year: BLR-2.5; 2nd Year: BLR-2.2%, 3rd Year and Above: BLR-1.9%. But some bank offer “flat rate” throughout the tenure, eg: BLR-2% from year one until you settle you home loan. So, which is better rate? Very hard to compare by looking at the interest rates; so, just ask the bank how much you need to pay per month and compare the “Monthly Installment Amount”, then you can know which rate is better. Eg. RM985/month vs. RM938/month for same tenure. This is very clear that RM938/month is a better offer rate.
4. Zero Moving Cost / Zero Entry Cost
In short, you don’t pay any single sen for refinancing, bank absorbed all the expenses including legal fees etc. You MUST ask for ZMC/ZEC, don’t dig your wallet to pay with your own money although the rate without ZMC is slightly better but I personally think not worth; unless you dig the money from other people’s wallet then it’s different story…
5. Lock-in Period
This is the period that you cannot refinance your home loan from other banks or else a penalty (normally 3% of your loan amount) will be imposed. In short, you are “in jail” within this period, normally is 5 years. Of course shorter term is better, it means you can refinance for better rate after lock-in period. If you like to stay in “jail” then it’s another story again.
6. Flexi Home Loan
This is very popular now. You MUST ask for FLEXI HOME LOAN because it is very flexible. How flexible? You can sit on your own head, can you imagine how flexible it is? Eg. You loan RM180K, if you have RM100K cash, you keep it in your Flexi Home Loan, the bank will only charge the interest based on RM80K, not RM180K. It means, you can save the interest of RM100K. So, if you have FD, withdraw it and dump all into your Flexi Home Loan because FD interest is around 2.0%-2.5% per year but home loan interest is around 3.55% per year, you can “earn” or “save” extra 1% from your Flexi Home Loan. Unlike the conventional home loan, the beauty of the Flexi Home Loan is that the Flexi Home Loan account acts like your saving account, you can withdraw cash from this account via ATM or cheque provided you have “available balance” in this account.
7. MRTA
In short, this is “insurance” in case you TPD (total permanent disablement) or Si Kiao Kiao (death), the insurance company will pay an amount to you (TPD) or your family (death) so that you can use it to settle your outstanding home loan. With MRTA, you don’t have to worry your house will be auctioned (Lelong) by bank when you can’t afford to pay it due to jobless or death. But take note that the amount is just an estimation, it does not tally with your outstanding amount, but it’s close to it. How much to pay for MRTA? It depends on your house value and how long is your tenure. A property of RM200K with 20 years tenure is around RM4K, I say around only, check with the bank, I just agak-agak only. In case you don’t have much cash like WoonKian.com, you can loan from bank with same home loan interest rate.
Which Bank Offers Good Home Loan Package?
You might want to know which bank is offering better home interest rates, please call few banks or make appointment to meet them with your existing loan agreement and ask for details, they are VERY HAPPY to see your handsome and pretty faces, and advise you. So, WoonKian.com, please act immediately so that you can save your home interest, you have wasted 3 years by paying extra interest to the bank for nothing! What you should do after saving such BIG MONEY, it’s simple, spend me good dinner.
Do you need to tell your existing bank that you want to refinance? Unless you want to give them a chance to revise their interest rate, otherwise the “new bank” will liaise with them, you no need to show face, your job is to shake legs at home, left leg, right leg and both legs together then follow up with new bank on the status and progress, which will take less than two weeks time.
Last but not least, my “Refinance” is referring to take home loan from other banks, not existing bank. You can ask your existing bank to reduce the home rate, you can stay with them if they can revise and offer better rate than other banks. For my case, my old bank is very stupid, I told them the interest rate that other banks offered me and I asked them whether want to revise my rate, the stupid bank revised the interest rate but still higher than the new bank who offered me lower rate. So, of course I took the loan from others.
Don’t forget, our ultimate goal is to “SAVE BIG MONEY” and shake leg at home, let the bank earns less from our bloody sweat's hard earned money!
I just talked to an old friend (WoonKian.com, he is not an old man but know him since primary one) this afternoon and got a shock when he told me that he is still paying 6.75%(estimate) for his home loan. He told me that he has been paying the home loan for 8 years. My advice to him is to “Refinance” his home loan and I am very sure that his home loan has exceeded the “lock-in” period, which is normally 5 years; some cases are 3 years or 7 years, you need to refer it to your loan agreement.
Does it mean if it is still within the lock-in period, he can’t refinance his home loan? No, but he has to pay “penalty” if he refinances from other banks during the lock-in period, eg. 3% of the loan amount. If your loan amount is RM180,000, then you need to pay RM5,400++ for the penalty. Unless the other banks offer very good rate to you, or your existing interest rate are too high, otherwise most cases are “not worth” to refinance during lock-in period.
What you should ask and compare when approaching banks for refinancing?
1. The Interest Rate
2. Monthly Installment Amount
3. Repayment Period
4. Zero Moving Cost or Zero Entry Cost
5. Lock-in Period
6. Flexi Home Loan
7. MRTA
1. The Interest Rate
Some banks are offering BLR-x.xx% and some banks have fixed interest rates. BLR (Base Landing Rate) is 5.55% (as at the date I write this post) for most of the banks in Malaysia. If the bank offer you BLR-2.0%, it means your interest rate will be 3.55%. If compare to my friend WoonKian.com’s current interest rate around 6.75%(estimate), he can save 3.2% from his interest, almost half of his existing interest, which means he can save his home loan interest by 47%. Some plans are fixed rates throughout the whole tenure, and yet, you need to compare which is better offer.
2. Repayment Period
Normally banks allowed 30 years tenure or up to 65 years old, whichever is earlier. But there are exemptions in some banks also. So, just tell the bank the repayment period that you wish, so that they can calculate the monthly installment amount and total interest to be paid. My suggestion is to take maximum tenure. The reasons are less monthly commitment and if you have extra money, just dump into the home loan as advance payment, you still can save the interest.
3. Monthly Installment Amount
Some banks might confuse you with their rates because some of the rates are cheapest in first year, slightly higher in second year, third year onwards is higher, eg. 1st Year: BLR-2.5; 2nd Year: BLR-2.2%, 3rd Year and Above: BLR-1.9%. But some bank offer “flat rate” throughout the tenure, eg: BLR-2% from year one until you settle you home loan. So, which is better rate? Very hard to compare by looking at the interest rates; so, just ask the bank how much you need to pay per month and compare the “Monthly Installment Amount”, then you can know which rate is better. Eg. RM985/month vs. RM938/month for same tenure. This is very clear that RM938/month is a better offer rate.
4. Zero Moving Cost / Zero Entry Cost
In short, you don’t pay any single sen for refinancing, bank absorbed all the expenses including legal fees etc. You MUST ask for ZMC/ZEC, don’t dig your wallet to pay with your own money although the rate without ZMC is slightly better but I personally think not worth; unless you dig the money from other people’s wallet then it’s different story…
5. Lock-in Period
This is the period that you cannot refinance your home loan from other banks or else a penalty (normally 3% of your loan amount) will be imposed. In short, you are “in jail” within this period, normally is 5 years. Of course shorter term is better, it means you can refinance for better rate after lock-in period. If you like to stay in “jail” then it’s another story again.
6. Flexi Home Loan
This is very popular now. You MUST ask for FLEXI HOME LOAN because it is very flexible. How flexible? You can sit on your own head, can you imagine how flexible it is? Eg. You loan RM180K, if you have RM100K cash, you keep it in your Flexi Home Loan, the bank will only charge the interest based on RM80K, not RM180K. It means, you can save the interest of RM100K. So, if you have FD, withdraw it and dump all into your Flexi Home Loan because FD interest is around 2.0%-2.5% per year but home loan interest is around 3.55% per year, you can “earn” or “save” extra 1% from your Flexi Home Loan. Unlike the conventional home loan, the beauty of the Flexi Home Loan is that the Flexi Home Loan account acts like your saving account, you can withdraw cash from this account via ATM or cheque provided you have “available balance” in this account.
7. MRTA
In short, this is “insurance” in case you TPD (total permanent disablement) or Si Kiao Kiao (death), the insurance company will pay an amount to you (TPD) or your family (death) so that you can use it to settle your outstanding home loan. With MRTA, you don’t have to worry your house will be auctioned (Lelong) by bank when you can’t afford to pay it due to jobless or death. But take note that the amount is just an estimation, it does not tally with your outstanding amount, but it’s close to it. How much to pay for MRTA? It depends on your house value and how long is your tenure. A property of RM200K with 20 years tenure is around RM4K, I say around only, check with the bank, I just agak-agak only. In case you don’t have much cash like WoonKian.com, you can loan from bank with same home loan interest rate.
Which Bank Offers Good Home Loan Package?
You might want to know which bank is offering better home interest rates, please call few banks or make appointment to meet them with your existing loan agreement and ask for details, they are VERY HAPPY to see your handsome and pretty faces, and advise you. So, WoonKian.com, please act immediately so that you can save your home interest, you have wasted 3 years by paying extra interest to the bank for nothing! What you should do after saving such BIG MONEY, it’s simple, spend me good dinner.
Do you need to tell your existing bank that you want to refinance? Unless you want to give them a chance to revise their interest rate, otherwise the “new bank” will liaise with them, you no need to show face, your job is to shake legs at home, left leg, right leg and both legs together then follow up with new bank on the status and progress, which will take less than two weeks time.
Last but not least, my “Refinance” is referring to take home loan from other banks, not existing bank. You can ask your existing bank to reduce the home rate, you can stay with them if they can revise and offer better rate than other banks. For my case, my old bank is very stupid, I told them the interest rate that other banks offered me and I asked them whether want to revise my rate, the stupid bank revised the interest rate but still higher than the new bank who offered me lower rate. So, of course I took the loan from others.
Don’t forget, our ultimate goal is to “SAVE BIG MONEY” and shake leg at home, let the bank earns less from our bloody sweat's hard earned money!